The average wage of workers in Britain will take almost a century to double as the country counts the cost of economic stagnation, experts are warning.
According to a new report from the Resolution Foundation think tank, if recent levels of pay growth continue, it will be 2099 by the time real earnings double - much later than was forecast prior to the 2008 financial crisis.
Economists “have blamed weak levels of productivity growth in the decade since the crash for the failure to boost workers’ pay because the measure of economic output per hour of work helps companies to generate greater profits with fewer resources – enabling them to raise the wages of their workers”, reports The Guardian.
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Latest figures from the Office for National Statistics show that the average wage, including bonuses, in the UK in July stood at £491 per week (£25,532 a year) before taxes and other deductions - around £31 lower than the pre-downturn peak of £522 per week (£27,144 a year) in February 2008.
By contrast, in the period from 1945 to 2002, real wages doubled on average every 29 years.
Since 2014, nominal pay growth has risen by an average of just 2.2% - about half the 4% pace before the crisis.
Bloomberg reports that about 700,000 workers in Britain are looking to take on more hours, up from 500,000 people before the crisis. Meanwhile, international research published last week found that almost half of all people on zero-hours contracts want more regular work and greater levels of job security.
Stephen Clarke, senior economic analyst at the Resolution Foundation, said: “Britain is living through a painful pay puzzle, where earnings growth remains rooted below 3% even while unemployment has fallen to a 40-year low.
“Understanding the real reasons why pay is performing so badly is one of the biggest challenges we face because, unless we fix it, it could take until the end of the century for real wages to double. Our work has shown that there are three core factors behind Britain’s pay problems, people wanting more hours or secure work, a diminishing ‘skills tailwind’, and terrible productivity growth.
“While the first trend is now fading, tackling the other two related problems isn’t easy. But that shouldn’t stop policymakers doing everything they can to address them, as the strength of all our pay rises in the future will ultimately depend on Britain solving its current pay puzzle.”
